Expert: liznarr - 5/21/2006

Question
Can a buyer terminate a contract and receive his earnest money back on the grounds of an unintentional mistake in square footage listing in MLS by the seller agent? Buyer claims the home was no longer the value (per square foot) that he originally thought, and therefore is not obligated to honor the contract. The buyer's appraisal came in where it needed to be, and there are no other contingencies.

Also, if one verbally and over e-mail renegotiates a signed contract (to no avail), does the previous contract become void?

Answer
Hi Janice,

The square footage issue could be a gray area, and several factors can come into play.  I am assuming you are the Seller, and I am listing below several questions that need to be answered.

1.   How much difference in square footage was the mistake?
2.   Does the MLS where your house was listed have information stating something to the effect that “all information is deemed reliable, but not guaranteed?”
3.   Some MLS services will show that the square footage is within a range of plus or minus ten percent.  Did yours?
4.   Did your listing agent physically measure the house?  If so, did he/she keep a copy of the layout used to compute the SF?
5.   Was the buyer represented by his own agent?

If the square footage mistake was a very minimal amount, the school of thought in many areas is that the purchaser SAW what he was getting, and it is assumed that the purchaser was satisfied with what he saw.  

If the square footage mistake was significant, then you could have an entirely different situation.

An additional factor coming into play is that if the Purchaser was represented by his own agent with a signed Buyer Agency Agreement, the Purchaser’s agent had an obligation to his Purchaser to VERIFY the square footage of your house.  I am not an attorney, and I cannot give legal advice; but I would think the PURCHASER’S agent might have some liability here.  Ditto for your listing agent if the mistake was significant.

No matter what the answers to the above are, if the Purchaser refuses to close, you have a problem ...  and be mindful that the Purchaser can tie your house up during any pending litigation, preventing another sale.

If your Contract of Sale provides for mediation, this is the route you might want to consider going.  If you are not familiar with mediation, go to www.google.com and enter “mediation” and/or “mediation vs arbitration” to get a better understanding of the process.

Mediation is basically a method of resolving disputes prior to litigation and is much quicker and much less expensive.

As to your question “ … if one verbally and over e-mail renegotiates a signed contract (to no avail), does the previous contract become void?”  … this would be a question better directed to an attorney, but I will give you the benefit of some additional information regarding contracts by email.

In years prior to 1999, Contracts always had to be in writing and physically signed to be enforceable in a Court of Law.  The Uniform Electronic Transactions Act of 1999, however, permits the writing and signature to be either by email or fax, and it has been adopted by 48 states (all but New York and Washington according to my information).  However, all these 48 adopting states might not have adopted the Act in its entirety, so you should consult an attorney in your state for clarification.  Therefore, it is “possible” that you could have entered into a legally binding Contract via email.  

Again, I would recommend that for GENERAL information, you can go to www.google.com and type in “email binding contract” and read some of the links that come up.  Again, be advised that not all content you read on the Internet may be 100% accurate, so do consult with a good real estate or contract attorney in your area for the answers you need.

Good luck to you, and write again if you have additional questions.  I will,  however, be signing off the Google site as being on vacation for the next ten days or so as I will be taking my Mother to the Mayo Clinic hospital for surgery.

Regards,
Elizabeth Narr